{"id":12986,"date":"2024-09-01T06:00:24","date_gmt":"2024-09-01T11:00:24","guid":{"rendered":"https:\/\/legaltalktexas.hammerle.com\/?p=12986"},"modified":"2025-06-18T12:18:42","modified_gmt":"2025-06-18T17:18:42","slug":"credit-card-collections-community-property","status":"publish","type":"post","link":"https:\/\/hammerle.com\/legaltalk\/legal-talk\/credit-card-collections-community-property\/","title":{"rendered":"Credit Card Collections: Community Property Throws a Wrench in Generic Advice"},"content":{"rendered":"

A well-known business columnist wrote a column tackling the subject of couples and credit. She addressed the issue of one spouse making the other an authorized user on their credit card and opined that only the person who opened the account is liable for the credit card debt.\u00a0<\/span><\/p>\n

She obviously is not from Texas.<\/span><\/p>\n

The Great State of Texas is a <\/span>community property state<\/span><\/a>. We have our own take on spouses, liability, and satisfaction of a judgment.\u00a0<\/span><\/p>\n

How Does Community Property Work?<\/span><\/h2>\n

Here is how it works. We\u2019ll take an imaginary married couple \u2013 Ernest and Mary \u2013 and walk through the law.\u00a0<\/span><\/p>\n

Ernest opens a credit card in his name. He designates Mary as an authorized signer on the card.\u00a0<\/span><\/p>\n

Mary charges $20,000 on the card. Neither Ernest nor Mary have enough money to pay the charge, and they default.\u00a0<\/span><\/p>\n

The credit card company sues Ernest, the account holder.\u00a0 It cannot sue Mary because she did not sign the contract with them.<\/span><\/p>\n

This tracks with the business columnist\u2019s advice. As far as the credit card company is concerned for its lawsuit, only Ernest is liable for the debt.\u00a0<\/span><\/p>\n

The credit card company gets a judgment and proceeds with collection. Now the columnist\u2019s advice becomes misleading.<\/span><\/p>\n

Defining Separate Property vs. Community Property<\/span><\/h2>\n

The credit card company can collect from Ernest\u2019s <\/span>separate property<\/span><\/a>. That is property owned by Ernest before marriage, is acquired as a gift, or is an inheritance.<\/span><\/p>\n

It can also be collected from the community property owned by Ernest and Mary. And everything Ernest and Mary own is presumed, by law, to be community property.\u00a0<\/span><\/p>\n

That means the credit card company can, in good faith, proceed against all of Mary and Ernest\u2019s non-exempt assets to pay the judgment against Ernest.<\/span><\/p>\n

Notice I threw in the qualifier \u201cnon-exempt.\u201d That is because Texas law makes certain assets exempt from collection. That, however, is a topic for another column.\u00a0<\/span><\/p>\n

Collecting from Community Property<\/span><\/h2>\n

Let\u2019s dive a bit more into the weeds regarding community property and collectability. Community property is divided into three categories:<\/span><\/p>\n